The risk-reward ratio compares how much you stand to lose against how much you stand to make on a trade. A 1:2 ratio means the target is twice the distance of the stop. This calculator finds that ratio from your prices and, more usefully, the minimum win rate it demands.
Distances are measured in raw price, so this works on any pair, gold, or index without needing the pip size. Direction is inferred from where the stop and target sit relative to entry.
How the ratio and breakeven work
The ratio is simply the two distances compared:
R:R = (target - entry) / (entry - stop) and breakeven win rate = 1 / (1 + R:R)
At 1:2 you only need to win one trade in three to break even, because each winner pays for two losers. At 1:1 you need 50%; at 1:3 you need just 25%. The higher your reward multiple, the more losses your strategy can absorb and still come out ahead - the exact trade-off explored in win rate vs risk-reward.
Why breakeven win rate is the real number
Traders obsess over win rate in isolation, but it is meaningless without the ratio beside it. A 40% win rate is a losing strategy at 1:1 and a strongly profitable one at 1:2. The breakeven figure tells you the pass mark: your actual win rate in a backtest has to clear it, with room to spare, before the edge is real. This is the foundation of expectancy.
A high ratio is not free: pushing targets further out lowers the win rate because price has more chance to reverse first. The goal is not the biggest possible R:R - it is the ratio your strategy can actually hit often enough to stay above its breakeven line.
Test the ratio against reality
The calculator tells you what win rate you need; only a backtest tells you the win rate you get. Run your setup across a real sample in the simulator and compare your measured win rate against the breakeven figure here - if it clears it comfortably across different conditions, you have found something worth trading.
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Risk-reward calculator FAQ
What is a good risk-reward ratio in forex?
Most consistently profitable strategies sit between 1:1.5 and 1:3. A 1:2 ratio is a common sweet spot because it only requires a 33% win rate to break even, which is achievable while still leaving realistic room for price to reach the target before reversing.
What win rate do I need at 1:2 risk-reward?
You need to win just over 33% of trades to break even at 1:2, so anything above that is profit. At 1:1 you need 50%, at 1:3 you need 25%, and at 1:0.5 you would need 67%. The higher the reward multiple, the lower the win rate you can survive on.
How do you calculate risk-reward from prices?
Divide the distance from entry to target by the distance from entry to stop. If the entry is 1.1000, the stop is 1.0970 (30 away) and the target is 1.1060 (60 away), the ratio is 60/30 = 1:2. Measuring in raw price means it works on any instrument.